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Document Type

Conference Paper

Publication Date

9-16-2002

Conference Name

International Conference on “Challenges to Central Banking from Globalized Financial System

Conference Location

Washington D.C.

Conference Dates

September 16, 2002

Series

Faculty Research - Book Chapters and Conference Papers

First Page

1

Last Page

6

Keywords

Financial system, IMF, Central Banking, Learning

Abstract / Description

1. THE ROLE OF THE CENTRAL BANK (C.B.) IN BANKING CRISES: Main Causes of Banking Crises: > Loss of Confidence > Liquidity Crunch > Solvency Problem arising from excessive volatilities Sources of problem: 1. Domestic and external macroeconomic volatility 2. Credit Booms and Capital Inflows 3. Asset Prices bubbles and collapses 4. Excessive Public Sector Involvement & political pressure 5. Increasing currency and maturity mismatches 6. Legal and Prudential weaknesses What can the C.B. do? ? Volatilities could be dealt with by: • Reducing volatilities under domestic control. Implementation of steady monetary policies. • Reducing exposure by diversification Foreign-owned banks • Insurance – Protection against volatilities Derivative markets • Financial Cushion Capital levels to compensate for volatilitie

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